This is the weekly Energy Sector financial summary.

The Weekly Energy Report attempt to see the big trends in the energy sectors1.

At the moment, the report is build around 116 companies. You can see their tickers, names, sectors and sub-sectors at the end of the report. Also, the focus is really on North-American Oil & Gas companies. We will address this shortcoming soon by adding more European and Asian energy companies to the mix as well as diversifying the industries to include uranium, electricity generations, renewable energies and industrials2.

We would love to hear from you. Are there typos, mistakes? Are graphs unclear? not useful? Should we add additional resources and analysis? Write us a mail

What made the news ?

Oil and Gas

  • Records export of crude out of the US. Mostly to China. The US is taking another piece of the market away from Russia and OPEC producers. The US is set to export 2.3 million barrels per day (bpd) in June, of which 1.3 million bpd will head to Asia

    • China is doing very well here. They are probably buying at cheaper than the ARAMCO rate (see news on WTI having the biggest discount to BRENT since many years) and they are easing Uncle Donald blood pressure on the trade issue with China. China is safe to keep exporting its cheap products to the US.
    • India has also been a very good doggy. It is listening well to Uncle Donald and news have emerged that they will start cutting down their purchases from Iran. Indian Oil Corp has bought 3 million barrels earlier this month via a tender, while Reliance Industries purchased up to 8 million barrels (FT)
    • Taiwanese state refiner CPC Corp [CHIP.UL] has also snapped up 7 million barrels to be lifted in June and July.
    • U.S. exports to Thailand will increase to at least 2 million barrels (FT).

  • A bit more news on the 22 June meeting. Saudi does not want to upset too much its old customers who are complaining after a 50% increase in oil price in 12 months but it still want to balance its budget. So for KSA a small increase in oil output is ok. For Russia in return they want a big increase in output because they have invested heavily in their export infrastructures (pipelines to Europe, Turkey). Russia would be happy with $60 per barrel. Saudi doesn’t want over $80 but is happy with that price. The rest of the OPEC members might want to see prices high to keep their mass happy. See what happen in Brazil when oil prices increases and oil have been subsidize for so many years? So I’m leaning for just a small decrease in price. Let’s cut KSA and Russia wishes in half… we’ll go to $70 ;-)

  • Halliburton has been selected by Aramco to bring up the shale gas from Saudi at cheaper price. With the US now exporting so much to Saudi Arabia (Oil exploration skills, loads of weapons and missiles), I am wondering why Uncle Donald is not talking about faireness of trade there!

  • The success of shale oil drilling is creating pipeline constraints in the US (nothing new(s) here) but the consequence is that the WTI has been trading $11 lower this week comparing to the Brent. Biggest spread since 2015. All the pipelines are at full capacity. This is actually good for KSA and Russia as the US has now a cap on what it can export.

Renewable Energies

  • China is changing the rules when it comes to wind power. Stocks there have plunged. China has become the world’s top wind power, accounting for one-third of global renewables investment(FT). Eleven per cent of energy consumed in China is from renewables.
  • Siemens Gamesa spending more ‘energy’ (ah ah ah) on storage technology. “Despite global wind installations falling since 2015, according to the Global Wind Energy Council, Mr Tacke said he believed the market would soon return to growth. The market for offshore wind turbines will grow more than twice as quickly as for onshore wind turbines, according to Mr Tacke, who predicted 13 per cent annual growth offshore, and 5 per cent annual growth onshore.” (FT)
  • Scotland pulled out a funny one last week. At the same time it touted it will be the best country in the whole entire world in cutting green gases emission …. it sold 123 new licenses to 61 companies for off-shore drilling of new oil wells. The North Sea is one of the most expensive place in the world to drill into … so the good brent price lately has probably made that sale a bit more palatable. “The eight firm exploration wells among the awards, with big companies like Shell, BP, Equinor and ConocoPhillips among those set to drill, is a big vote of confidence in the UK.”

  • European Oil Majors keep investing in renewable energy Cies. This week was BP buying an Isreali Cie that manufacture ultra fast charging battery. Think about it as buying a position in the electric vehicle technology. But before that was Shell divesting this year from the Canadian Oil and buying Sands NewMotion, a Dutch operator of one of Europe’s largest EV-charging networks. Total is developing next-generation EV technology through its Saft battery business.

    • Shell and Total have also investment in wind and solar farms accross Europe.
    • I am wondering if this just to appease the green-minded european counscious +coporate social responsability or if they truly see some economical sense in those. In any case it does make for these big european integrated oil cies to stay close to how the vehicle of tomorrow will move.
    • interesting analysis about the EV of the future: “the number of EVs on the road globally was likely to reach 300m by 2040, up from 3m today. That would still only be 15 per cent of the global car fleet but EVs would account for 30 per cent of all passenger car transportation, measured by distance travelled, because so many of them would be shared vehicles and therefore used more intensively. Spencer Dale, BP chief economist, said this trend would be amplified further when car-sharing converged with autonomous vehicles. “Once you don’t have to pay for a driver, the cost of shared mobility services will fall by 40-50 per cent,” he said. “We will get a big surge in shared mobility cars and most of those will be EVs.” (FT)
    • The debate on battery vs hydrogen is still strong. Shell also invested in hydrogen. Sketics argue about the cost of infrastructure there.

  • Maybe here is the renewal for utilities cie … They have been lagging this whole market rally lately" “Charging of EV is not going to be done in the city where the gas stations are today. It will be done outside the city. At two or three in the morning the cars will go out to the substation, where you have high voltage and charge tens of thousands of cars at a time.” …. But how much energy will it take for these cars to go and back to the big charging station?

Uranium

  • Uranium news were mainly from UK this week.
    • renewed talk about the new nuclear reactor at Wylfa. A subsiadiary of Hitashi would install it and they are striving to bring it a lower strike price than Hinkley Point. Main issue is about financing it due do some earlier pledge made by UK that they will not finance new nuclear reactors.
    • UK has been burned pretty badly with the Hinkley reactor made by EDF. They are like 10 years behind schedule and billions in overcost. That should not help the beef vs frog feud!

Report higlights.

General Energy overview

List of ETF selected for the general overview.

Selected Energy related ETF
ticker Name
VDE Vanguard Energy ETF
IXC iShares Global Energy ETF
KOL VanEck Vectors Coal ETF
URA Global X Uranium ETF
UNG United States Natural Gas Fund LP
MLPX Global X MLP & Energy Infrastructure ETF
USO United States Oil Fund LP
SPY SPDR S&P500

Returns of the energy ETF over the last 3 months

Returns of the energy ETF over the last 12 months

The Oil & Gas Industry

Following GISC, the Oil & Gas (OG) industry consists of the following sectors and sub-sectors:

List of Sectors and Sub-sectors of the O&G Industry
Sector Subsector
Equipment & Services Drilling
Equipment & Services Equipment & Services Cies
Consumable Fuels Exploration & Production Cies
Consumable Fuels Major Integrated Cies
Consumable Fuels Refining & Marketing Cies
Consumable Fuels Storage & Transportation Cies

At the bottom of this file, there is the complete list of financial instruments with their sectors and sub-sectors on which the following analysis has been based on.

Breadth of the Oil & Gas Market

Usually, on shorter time frame, we use the 50 days Standard Moving Average (SMA) to see if a stock is in an uptrend. The graphs below does exactly that: it checks the percentage of stocks that are trading above their 50 days SMA. This also tell us when the sector might be over-extended to the upside or to the downside.

Weekly and bi-monthly returns

In this section, we check the weekly return for the last 12 weeks for all stocks belonging to the industry, sectors and sub-sectors.

We do the same graph but with a 2 weeks return and a disaggregation by sub-sector.

Recap table

Now let’s have a recap table to drill in at the company level. This table has been generated with data from 04 June, 2018

Uranium

The list of financial instruments

Here is the list of all equities used in this report, their sector and subsector.

If you have enjoyed this report, let us now.

  1. The report has been generated with the R language and thanks to the many community members who have contributed their time in building packages.↩

  2. We use the AlphaVantage API to get our data.↩